Question About Capital Gains on Investment Property for a Relative Newbie

Trying to keep this short, and apologies if this has been asked before, I just found this sub. Anyway, I own a rental property I bought in a LCOL neighborhood for very little ($41k, I owe $28k). Ive had it for about 5 years, and recently done a pretty heavy reno on the inside. I still need to do some work on the outside, but similar house plans in the same neighborhood are now selling from $120-160k in that same neighborhood depending on levels of renovation.

While I would like to keep it for life and collect that passive income, I realize that its a ticking time bomb because rodents are already chewing through the new polybutylene pipes I just put in and keeping renters is a pain. So I was thinking of selling while the market is hot, as its as crazy as its ever been (Charleston, SC)

Unfortunately, I know I will be losing a ton of my profits to capital gains, since a 1031 doesn’t do me much since EVERYTHING is insanely overpriced and all the fixer-uppers are long gone already. But since I have a healthy amount of equity in the house, would it make sense to do a cash-out refi and pull as much capital out now then eventually sell and just repay the terms of the loan? Or is that against some kind of rules/regulations? I couldn’t get a straight answer from anyone I know, so I’m consulting strangers on the internet! Anyway, thanks for reading, and looking forward to browsing this sub much more often!

submitted by /u/munch_the_gunch
[link] [comments]

Trying to keep this short, and apologies if this has been asked before, I just found this sub. Anyway, I own a rental property I bought in a LCOL neighborhood for very little ($41k, I owe $28k). Ive had it for about 5 years, and recently done a pretty heavy reno on the inside. I still need to do some work on the outside, but similar house plans in the same neighborhood are now selling from $120-160k in that same neighborhood depending on levels of renovation. While I would like to keep it for life and collect that passive income, I realize that its a ticking time bomb because rodents are already chewing through the new polybutylene pipes I just put in and keeping renters is a pain. So I was thinking of selling while the market is hot, as its as crazy as its ever been (Charleston, SC) Unfortunately, I know I will be losing a ton of my profits to capital gains, since a 1031 doesn’t do me much since EVERYTHING is insanely overpriced and all the fixer-uppers are long gone already. But since I have a healthy amount of equity in the house, would it make sense to do a cash-out refi and pull as much capital out now then eventually sell and just repay the terms of the loan? Or is that against some kind of rules/regulations? I couldn’t get a straight answer from anyone I know, so I’m consulting strangers on the internet! Anyway, thanks for reading, and looking forward to browsing this sub much more often! submitted by /u/munch_the_gunch [link] [comments]

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